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Real Estate and Business

OSFI Changes May Signal Expectations of 2% Increase in Mortgage Interest Rates

This month the Office of Superintendent of Financial Institutions for Canada is finalizing changes in legislation that will include requiring those that purchase a home with a minimum down payment of at least 20%, not needing mortgage insurance, to prove they could still afford their mortgage payments if interest rates were 200 basis points (two percentage points) higher than the rate they negotiate.

Jeremy Rudin, the Superintendent of Financial Institutions, told reporters. “But we do know this: Housing prices are still near their all-time highs, and mortgage rates are still near their all-time lows. And while sound underwriting is always important, it’s never been more important than it is now.”

Though OSFI, nor the banks have stated that interested rates are headed 2% higher, the fact that they are stress-testing for this to happen, tells me that they are planning for it to happen.

Meanwhile, the Bank of Canada has already announced that they are expecting to increase interest rates again later this month.

Banks have already tightened their lending policies and I’m getting reports of strong applicants having their mortgage applications turned down by the banks.

Globe and Mail article on OSFI announcement

Mississauga Council Saboteur Causes Turmoil

A well-intended gesture by Mississauga city manager has been targeted by a saboteur who in the process may have become target.  The simple act of forwarding an internal memo to the media constituted a breach of code of conduct and justified an investigation according to Councillors Pat Mullin and Jim Tovey.  Can Mississauga city council flush out the person at the centre of the malicious act?

It started when when Mississauga city manager Janice Baker sent a memo offering for the city to pay for $350 tickets for Mayor Hazel McCallion’s 90th birthday celebration for a total cost to taxpayers of $10,000.  McCallion had committed proceeds from the celebration to be contributed to Sheridan College in Mississauga, what most people would consider a worthy cause.

In itself such an offer does not fall outside the custom in many government and corporate organizations, but is it the right thing to do?  Given the length of term that McCallion has had as Mississauga Mayor and the extra-ordinary results she’s achieved as far as being a mayor certainly demands recognition of some sort.  The woman political leader who has fought and won many battles and modernized a city is by any definition an inspiration to women everywhere.  Her practical and competent decisions and management style are precisely what are needed in city hall.  So from a social engineering perspective alone we should acknowledge and celebrate this leader’s 90th birthday.  We should treat our best with the respect and acknowledgement they deserve.

From a financial perspective, an investment in an educational institute within your city and supporting the success of a big ‘bash’ will bring money into the city.  It will also set an example of the calibre of events that can be held in Mississauga.  Since Mississauga is so close to Toronto, it suffers from the shadow of the giant complex.  People look to the light of Toronto for their high profile events and overlook nearby cities like Mississauga.  What better way to show the event planners that they can have a great event in the city than to show them a great event?

The reason I’ve mentioned this is to point out that if anyone had Mississauga in their best interests they would be supporting the event, rather than trying to criticize something positive the city manager tried to do.  Instead a memo was maliciously released in an attempt to sabotage city council…and it may have worked.  However, the attempt may have worked so well that the saboteur may have made himself or herself a target.

During a council meeting this past Wednesday, Councillor Katie Mahoney asked for an investigation into who forwarded the memo, “I would ask IT (the department that manages internet communications) to come do a search of all my equipment in my office and my home.” 

Makes sense to me.  You find that there may be a saboteur within your organization so you investigate – right?  Well, Councillor Adams doesn’t seem to agree.  Councillor Eve Adams commented “To me this seems like a very bizarre discussion.  We’re not addressing the meat of the issue.”  I’m not sure what Adams considers to be the “meat” of the issue, but apparently she may not believe that sabotage is the issue.

Councillor Ron Starr commented that “It becomes a toxic environment because we’re looking over our shoulders the whole time.”  Starr makes an excellent point and I myself would ask how can an organization run effectively if individuals are worried some opportunistic saboteur is going to use memos and correspondence out of context to try and manipulate situations to their own agenda?

The cost of having a saboteur within your organization is much greater than any cost of finding and removing that individual.  The sooner they find this person the sooner council can go back to focusing on their business and running more efficiently.

If Mahoney pushes ahead with her investigation I predict that she will find much more than just a saboteur.  She’ll probably also find a lot of things taking place that the Mississauga taxpayers wouldn’t agree with and which may also be detrimental to the re-election of specific councillors.  It would certainly be a step towards having a cleaner council.

Nuclear Issue Shows Obama Ignorance

The U.S. Senate voted 67-28 to end debate on the New Strategic Arms Reduction Treaty and proceed to a final vote.  They have enough support to proceed to a final vote and ensure the two-thirds majority necessary for ratification.

President Barack Obama has a lot at stake in the ratification vote because he made nuclear disarmament a cornerstone of his presidency.  Furthermore, he was awarded the Nobel Peace Prize for a speech declaring America’s “moral responsibility” to rid the world of nuclear weapons.

The treaty was signed in April of 2010 by President Obama and Russian President Dmitry Medvedev.  It would cut strategic nuclear arsenals by one-third leaving each country with some 1,550 warheads, cut from the current limit of 2,200.

At the surface it seems that Russia has softened its previously stance against allowing U.S. missiles in European countries.  After the signing of the Treaty, it also adjusted its stance on Iran and Afghanistan.  On the surface it looks good for world peace right?  Hmmm….lets take a closer look.

Have you heard of Kazakhstan.  Kazakhstan, officially the Republic of Kazakhstan, is a transcontinental country located in Central Asia and Eastern Europe. It is ranked as the nighth largest country in the world, is the world’s largest landlocked country with a territory of 2,727,300 km², which is greater than Western Europe.  The country is neighboured Russia, China, Kyrgyzstan, Uzbekistan, Turkmenistan, and also borders on a significant part of the Caspian Sea.  It is a former state of the United Soviet Socialist Republic (USSR).  It was the USSR’s primary nuclear weapon testing site.

Something else you should know is that Kazakhstan is that over the last few years, from a production perspective, Kazakhstan has aggressively promoted its Uranium mining activities to the point where their mines in 2009 produced over 14,000 tonnes of Uranium, followed by Canada with over 10,100 and Australia with almost 8,000.  They are now looking to be the world’s largest exporter of Uranium.

Now let me tie it together for you:
– Russia’s strategy is to focus on energy supply and control as much supply into Europe as possible.
– Kazakhstan is a former Soviet state, still very heavily influenced (or controlled) by the controlling political class in Russia.
– Kazakhstan has aggressively promoted its uranium mining activity to become a world leader, fast tracking projects at fractions of the time that they would be approved in Canada or Australia.
– Kazakhstan is manipulating circumstances to take control of Uranium projects developed by foreigners. (Take a look at Uranium One: UUU and how they tried to arrest company officials and take over the local operations of a Canadian-based exploration company)
– Kazakhstan has more uranium than it knows what to do with and is looking for buyers (most likely China, but also anyone that will pay for it)

Given the above, of course Russia wants the U.S. to sign an agreement to reduce uranium supplies.  Meanwhile, Russia works through its puppet state (Kazakhstan) to develop and export as much uranium as possible.  It is just another way to take over another energy source.  Meanwhile, the U.S., lead by a naive politician is totally oblivious to the consequences, not just on the U.S. economy but also on the geopolitical implications.

Could you imagine a world where you had to get your uranium for our reactors (not to mention weapons) from a Russian puppet state?  Forget about $50 per pound pricing.  Look more at $100-$200 per pound pricing.  Also forget about becoming an innovator in the development and use of clean energy and energy supply security.

I don’t think Barack Obama is thinking past the next election.  Where is his 10 year, 25 year, 50 year plan to assure the success of the United States into the future.  No wonder Americans are cashing in their greenbacks and buying gold bullion or taking their money offshore.

What do you think?

By the way, if this agreement is approved the 95% grade uranium in the war heads will have to be removed and disposed of, usually by putting it into the fuel supply for nuclear reactors.  However, reactors take a 6% concentration, therefore the uranium has to be de-graded.  Analysts were predicting a spike in uranium prices by 2013 because of the ending of the previous agreement by which Russia was dismantling their weapons and selling the uranium into the fuel supply.  This treaty would in fact be a type of extension of this supply.  Also, I wonder how well regulated and secure the uranium stocks are in that part of the world, especially when last year someone in India was found walking around with a case of uranium.

On a positive note, I’m glad that atleast on the surface the politicians are agreeing to reduce the nuclear weapons.  We have way more than we need and too much to assure our security.

Peace to all.

Panda Bears, Mammoliti and Raymond Cho…What’s The Story?

In November’s President’s message for MetroActive I commented on commented on the $20 million that George Mammoliti had budgeted to bring a pair of Pandas from China to the Toronto zoo for 5 years (read the message).  It just didn’t make sense to me and well smelled really, really fishy.  Apparently, I’m not the only one that thought poorly of the details of this initiative.  At first glance it seems to me to be an example of several possibilities, extremely poor negotiations and/or irresponsibility and/or a waste of tax-payers money.

Well a couple of weeks after my post the cost of housing the two Pandas at the zoo has dropped to $8 million.  Before you think the gravy train is over, consider this.  What if you were to hear that for the first time, $8 million to rent two bears for 5 years.  That’s a lot of bamboo shoots my friend.  Something still doesn’t smell right.  If it truly costs that much, then why are we even thinking of bringing the Panda’s here?

I just can’t get that fishy smell out of my nose.  So, I started snooping around and guess what?  Toronto City Councillor Raymond Cho for Ward 42 Scarborough-Rouge River is also the Chair for the Metro Toronto Zoo (Chairman for at least two consecutive terms).  I found some interesting information about Cho:

1. Though he’s the councillor for Ward 42 he lives in another ward (how can that be right?)

2. According to Wikipedia ( “On August 13, 2004, the Toronto Star reported that Cho spent nearly all of his allotted councillor expense fund, one of the highest on city council. While there was some speculation that some of this money was diverted to Cho’s failed bid to run in the federal election campaign…”

3. According to Wikipedia (same link as above), Cho was an unsuccessful New Democratic Candidate (NDP) in the 1988 federal election. He later drop his affiliation with the NDP and became a member of the Liberal Party.

4. There is a you tube video ( showing Cho speaking at council about bicycle initiatives with an interesting comment to the video that points out Cho has four cars parked in his driveway all the time.  Somehow doesn’t seem like someone who’s living what he’s preaching.

I’m not sure what Cho’s relationship is with the Panda Bear initiative or his relationship with Mammoliti.  Other than Cho being the Chairman of the Toronto Zoo where the Panda Bears are to be housed I don’t know how all this is related, but something tells me there MAY BE more to this story.  So rather than me speculate and make assumptions I’d like for someone to look into it.  This might make for an excellent case study into how municipal politicians decide on how to spend their time, our taxpayer dollars, and make decisions.

If we’re going to stop the gravy train we need to hold accountable those that are making the decisions.  Do we have an independent committee from council (with non-council or council-affiliated members) that looks at situations like this?  Maybe we should!

Don’t you want to know what’s going on with our city?

What do you think?  Do you know anything more about this that you can share?

Fertilizer Off-Limits…But Here’s Some Uranium For You.

Having worked in the Uranium industry and understanding it better than most Canadians, I was surprised to read this morning that Saskatchewan Premier Brad Wall supports a federal private member’s bill sponsore by Saskatchewan Conservative MP Brad Trost.

Allow me to share some background with you so that you may understand my surprise.

The Uranium industry around the world has been protected by national governments for reason’s of environmental, military, economic and political sensitivity.  Over the last few years Canada has been the world leader in Uranium production, supplying about 30% of the world’s Uranium supply, followed by Australia and then Kazakhstan. However, over the last three years from a production perspective, Kazakhstan has aggressively promoted its Uranium mining activities to the point where their mines in 2009 produced over 14,000 tonnes of Uranium, followed by Canada with over 10,100 and Australia with almost 8,000.

So, what’s driving Kazakhstan’s rise to the top?…the forecast for Uranium demand and the government’s willingness to allow exploration and mining activities that are much more lax than those in Canada and Australia. The forecasts show that the demand for Uranium, primarily from China and India for nuclear reactor fuel will show a very tight market in 2013. Uranium has moved from being a strategic mineral for military purposes to being a strategic mineral for economic purposes.

If China can’t get cheap energy to power their mills, refineries and factories, then they can’t continue to compete with producers from other countries. That is why China was trying to buy a Canadian Potash  producer recently, so they could control the price of fertilizer to make their farms more productive.  Otherwise, they can’t produce as much per acre to be able to compete against Canadian farmers.  Plus they could sell any surplus to other countries at a much higher price to assure that they can’t compete with Chinese producers. This is a tactic they’ve used in various situations and why they have been able to produce products cheaper in the past.

By the way, Canada is the world’s largest producer of Potash with a 51% share of the market. We are the leader, why would we want to just hand that over to someone else without getting equal benefit in return. Kudos to the government for knowing the value of our Potash and not giving it away at a discount!

So what about Uranium?  Although Uranium for fuel is different than Uranium for military uses (6% concentration versus 96% concentration) the danger remains that if anyone secures a supply of Uranium ore they can refine it using basic centrifugal processing. This would allow them to concentrate Uranium to the point where Weapon grade Uranium can be produced. They ofcourse need much more technology to use it for military purposes. This is the concern over what is happening with Iran. Therefore, the military and political sensitivity with Uranium remains in place and should not be ignored.

Let us not forget that Uranium has other uses that are rarely discussed in the media. The most important being medical research, diagnostic and treatment. I myself have benefited both directly and indirectly from the medical applications of Uranium and its by-products and am grateful for it. In this way, Uranium has saved lives.

As for Uranium as an economic tool, this goes back to the shifting of world economic powers. The low cost of Nuclear fuel compared to the alternatives combined with its base load reliability makes it a desirable source of energy for the economic complex. Basically, once you turn on a nuclear reactor it will produce cheap energy for years to come. It will also produce that energy regardless of time of day or weather conditions. Do you see the competitive advantage yet?  In addition, it is produced locally, so you don’t have to worry about your natural gas pipeline being shot-off by Russia, as they did to Europe in 2008 or the interruption of shipments over the boarder, such as China has done with Rare Earth Elements (REE) to Japan over the last two months. REE are used by Japan for the manufacture of high-tech vehicles, industrial equipment and products.  Without their supply, Japan can’t produce these items, has to shut down plants and therefore can’t export product in return for money. It’s simply modern economic warfare.

This is why China has been aggressively looking to secure resources, especial energy sources. It knows that without control over these production inputs it is still vulnerable to international influces and politics. And China does not want to be accountable to anyone. Potash is just one of the production inputs China would like to secure, Uranium is another, but their are many others. For example, China has invested hundreds of millions of dollars over the last couple of years in specific educational institutions and programs in China.  They are looking to transfer as much knowledge as they can so they can replicate it throughout their population and then with their large population use probability to create further knowledge to better compete against other countries. This is the reason I am surprised that Dalton McGuinty is looking at giving $40,000 scholarships to 75 Chinese students every year.

As for Uranium, now that I’ve covered its political and economic sensitivity it should be obvious why we should not have China, or any other country own Uranium mines in Canada.  Uranium should remain a strategic mineral as Potash is and we should not treat it any differently.

Although Mr. Wall would like to repair damage to Saskatchewan’s willingness to attract investment, the solution isn’t to make a bad political decision.  After all, investing in Canada seems to be a lot easier than investing in other countries. Could you imagine China allowing a Canadian company to own an Uranium mine in China. No way they would let that happen. Now China is saying a Canadian company can’t even own real estate in China unless it is used for its operations (creating local Chinese jobs).  Yet, a company owned by Chinese in Canada can buy farms, empty land, all the small businesses they want.

It is time that we as Canadians started thinking strategically and stop giving away our competitive advantage. We have more natural resources than any other country.  So, lets leverage them and make sure that we get value in return, value through sustainable cash flow, through sustainable lifestyle, through sustainable living environment, through sustainable economy, but most of all through sustainable values that will allow the Canadian legacy exist well into the future.

Uranium should be treated with as much respect and sensitivity as Potash has been treated.